Items of Interest 4TH QUARTER PRICES ROSE IN HALF OF THE METRO REGIONS According to the National Association of Realtors (NAR), 73 out of 150 metropolitan statistical areas (MSAs) show increases in existing single-family median home prices from a year earlier, including 11 areas with double-digit annual gains and another 12 metros showing increases of 6 percent or more. Seventy-seven had price declines, including 16 with double-digit drops. Commented NAR Chief Economist Lawrence Yun: "The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges," he said. "For buyers who need loans of more than $417,000, mortgage interest rates have been running more than a percentage point higher, and that has been having an obvious impact. Higher ratios of sales for more moderately priced homes are naturally dampening the national median price as well as the data for some of the more expensive markets." The disruption in higher priced sales continues to drag down the aggregate national median, which was $206,200 in the fourth quarter, down 5.8 percent from the fourth quarter of 2006. In the condo sector, metro area condominium and cooperative prices record a show the national median for existing-condos of $221,100 in the fourth quarter, essentially unchanged from the year earlier quarter. Thirty-three metros showed annual increases in the median condo price, including four areas with double-digit gains; 26 areas had price declines including four with double-digit drops. THE TIMES WEIGHS IN ON CITIES WITH RISING PRICES In small cities such as Austin; Grand Forks, N.D.; Yakima, Wash.; and Salem, Ore., the available evidence suggests the real estate market is holding up, the newspaper finds. Prices there never boomed as crazily as they did in the big cities, and now prices in many of these towns are firm or rising. An analysis by of three distinct data sets - mortgage data from the government, sales figures from the National Association of Realtors and courthouse records from a company called DataQuick - produced a list of 17 metropolitan areas where all three sources of information agree that prices were still rising as of late last year, the most recent figures available. For another 43 cities, two data sets, from the Realtors and the government, suggested that prices were still rising late in the year. DataQuick could provide no information on those cities. Economists say small and medium cities, especially those where land availability is not a constraint on growth, have done better than the nation as a whole because they have followed more traditional economic patterns. New-home prices in most of these places still reflect, more or less, the cost of the labor and materials used to build the houses, in addition to a profit margin. Steve Dennis, a business professor at the University of North Dakota added that, "since you didn't have the price appreciation, you don't have the price correction." Generally, the markets that are showing strength do not have the bulging housing inventories of larger cities because there was relatively little speculative building during the early part of this decade. Typically, their local economies are still producing new jobs and healthy income growth or an influx of second-home buyers (Sun Valley, Idaho). The fly in the ointment for these cities is declining sales volumes, which prompt some experts to argue that median prices are presenting an unduly rosy picture. If fewer houses sell, but the ones that do sell are at the high end of the range, that can skew median prices. Said Todd Sinai, a real estate professor at the University of Pennsylvania: "The market is doing a lot worse than what the median prices would show." Realtors in medium and small cities contend the median price figures may actually underestimate market sentiment; they say the issuance of large mortgages has frozen up in recent weeks because of problems on Wall Street. In the view of these Realtors, it is the high-end sales that are stalled in smaller cities, skewing the median price data downward. NO REAL CHANGE RECORDED IN JANUARY HOUSING STARTS But overall permit issuance declined 3 percent in January to the lowest amount since November of 1991, according to the U.S. Commerce Department. Single-family permits were down 4.1 percent, while multifamily permits were virtually unchanged. Single-family permit issuance was at its lowest since January of 1991. Housing starts rose by 0.8 percent for the month, with single-family production down 5.2 percent and multifamily production (which tends to display significant month-to-month volatility) up 22.3 percent to a rate that was still well below the previous quarterly average. Single-family housing starts, at 743,000 units, declined for a tenth consecutive month to their lowest rate since January of 1991. NAR SEES SLOW MARKET UNTIL THE SECOND HALF OF 2008 The reliably optimistic National Association of Realtors (NAR) envisions a continuation of soft market conditions for sales of previously owned homes in the months ahead, with improvement by the last six months of the year. "Household formation was only half of what it should have been last year given the demographics of a growing population and sustained job growth, so there clearly is a pent-up demand from buyers who are on the sidelines," commented NAR Chief Economist Lawrence Yun. "Existing-home sales have moved narrowly since last September, but when the full impact of higher loan limits for conventional mortgages begins to impact the market, there is likely to be a notable rise in home sales and price." The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December was 24.2 percent below one year earlier. "We're seeing a pattern that is consistent with skimming along the bottom of the cycle, and sales could ease modestly," Yun said. He forecasts a decline in existing-home prices of 1.2 percent in 2008 to a median of $216,300, and then a rise of 3.2 percent to $223,200 in 2009. In NAR's prediction, new-home sales are likely to decline 17.7 percent before rising 7.6 percent in 2009. "Builders will further lower new home construction throughout this year and into 2009 to bring inventory under control," Yun said. Housing starts, including multifamily units, are estimated to fall 20.1 percent this year and decline another 1.3 percent in 2009. The median new-home price is expected to fall 4.3 percent to $236,300 in 2008, and then increase 5.0 percent in 2009. REMODELING ACTIVITY FELL 11% IN THE LAST QUARTER Showing pressure from the housing downturn, according to the National Association of Home Builder's (NAHB), the indicator of current market conditions in the Remodeling Market Index (RMI) decreased to 40.9 from 46.2 in the third quarter. And the future expectations measure declined to 37.9 from 43.3 in the previous quarter. The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number over 50 indicates that the majority of remodelers view the market conditions as improving, but the RMI has been running below 50 since the final quarter of 2005. "There is more weakness in the upper end of the market, the high-end kitchens and baths and room additions," Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies, Harvard University, told the Wall Street Journal. "Moderately priced projects ... there is more emphasis there." Although remodeling expenditures nationally are expected to show a slight increase in 2007, according to Gopal Ahluwalia of the National Association of Home Builders, he expects little growth in remodeling in 2008. IF YOU WANNA SAVE ON HOUSING COSTS, TRY INDIANAPOLIS That city maintained its standing as the most affordable major U.S. housing market for a 10th consecutive time in the fourth quarter of 2007, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). Nationwide, housing affordability increased for the quarter and on a year-over-year basis, rising to the highest level since the first quarter of 2005. In Indianapolis, 89.5 percent of homes sold in the fourth quarter were affordable to families earning the area's median household income of $63,800. Also near the top of the list for affordable major metros this time around were Youngstown-Warren-Boardman, Ohio-Pa.; Detroit-Livonia-Dearborn, Mich.; Toledo, Ohio; and Grand Rapids-Wyoming, Mich., in that order. Los Angeles-Long Beach-Glendale, Calif., maintained its long-held standing as the nation's least-affordable major housing market, now for 13 consecutive quarters. Other major metros at the bottom of the housing affordability chart included San Francisco-San Mateo-Redwood City, Calif.; Santa Ana-Anaheim-Irvine, Calif.; New York-White Plains-Wayne, N.Y.-N.J.; and Oxnard-Thousand Oaks-Ventura, Calif. in that order. FIX THE PRICE PRECISELY, RESEARCHERS FIND A team at Cornell University has found that people will pay more for a house if its listing price does not end in a bunch of zeros, according to the Washington Post. In other words, the researchers say, you might make more money if you price your house at $325,425 rather than $326,000. "It's a psychological bias," said Manoj Thomas, an assistant professor of marketing, "a bias in judgment." The study concluded that because people are used to precise numbers for items that don't cost much and to round numbers for large amounts, consumers generally and home buyers specifically tend to perceive that a price is smaller if there are digits at the end instead of zeros. "It does seem ridiculous," Thomas said. "But when you see a price, your response is not always based on deliberative reasoning." Thomas said the results were confirmed in lab tests with 134 graduate students and by examining 27,000 real estate transactions in two markets - South Florida and Long Island - where most list prices had three ending zeros. (The researchers didn't consider prices ending in nine because of a separate consumer bias regarding those numbers.) In South Florida, having at least one zero at the end of the list price lowered the final sale price by about 0.72 percent compared with houses listed at a similar price; having three zeros lowered it by 0.73 percent. In Long Island, the impact was smaller. BUILDERS ARE FEELING A TINY BIT BETTER Their confidence in the market for new single-family homes edged marginally higher in February as traffic of prospective buyers through model homes improved considerably, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). The HMI rose a single point to 20 this month, still close to its recent historic low reading of 18. (The series began in January of 1985.) BIRDS OLDER THAN 55 ARE EXPECTED TO FLOCK TOGETHER According to a new study by the National Association of Home Builders (NAHB), more than a quarter of a million people will opt to buy new housing in communities specifically built for those ages 55 or better. Further, more than 100,000 units constructed in 2008 will be targeted to this growing niche market. The NAHB report, Profile of the 50+ Housing Market, also dispels some common perceptions about the older home buyer: First, "downsizing" is a relative term and, second, the vast majority of these buyers won't be relocating to the Sun Belt. "Our data shows that 55+ home buyers may be 'downsizing,' but not by much," said Paul Emrath, NAHB's lead researcher on the study. "The average home in an active adult community still includes more than two bedrooms and more than 2,000 square feet of living space." The majority of age-restricted housing buyers (59 percent) indicated they felt they were moving into a better home than their previous one, although fewer than half (41 percent) said their new home cost more than the old one. More than half of all new buyers in 55+ communities move within the same county as they currently live. THAT OPENED DOOR IS COSTING TENANTS LESS Manhattanites are ditching doorman buildings, reports the New York Observer. That's what new numbers suggest: Rents dropped from January through February in doorman buildings throughout Manhattan. In some neighborhoods, rents in doorman buildings fell steeply - for example in Battery Park City, where they were down in every apartment size surveyed, including more than 5.6 percent for two-bedrooms. In SoHo, the average rent for doorman one-bedrooms dropped 6.1 percent; in Tribeca, doorman studio rents fell 6.3 percent. And, in Harlem, the least expensive neighborhood surveyed, doorman rents for two-bedrooms dropped over 7.1 percent to $2,804 monthly. At the same time, non-doorman rents in many neighborhoods rose in February. In Chelsea, in non-doorman studios, rents increased 7.5 percent on average. On the Upper West Side, more than $1,000 separates the two monthly averages for doorman and non-doorman one-bedrooms: $2,563 for non-doorman versus $3,567 for doorman. On the Upper East Side in February, the difference was similarly sharp: $2,448 versus $3,516. THE AVERAGE PRICE OF A NEW YORK CITY HOME ROSE 15% IN 2007 BROKER COMMISSIONS MAY BE RISING So says Steve Murray, editor of Real Trends, which tracks commission rates, according to the Real Deal. From 2001 to 2005, the average commission paid to the nation's brokers dropped on average from 6.1 percent to 5.02 percent, Murray found. But in 2006, when prices started stabilizing and housing sales began to drop off, the average broker commission actually went back up, to 5.18 percent. "The downturn really started in July 2005," said Murray. "That was when brokers saw for the first time in 15 years that they had less business." Most brokers say it is taking them longer to sell the same apartment, and they are still looking to make as much - or at least enough money to live on. For example, an American home that might have sold for $1.45 million in the summer of 2005 might now be selling for $1.2 million; 5 percent of $1.45 million is equivalent to 6 percent of $1.2 million. Sometimes new developments will also offer higher commissions at different parts of their marketing cycle. In Manhattan, the Platinum at 247 West 46th Street is offering 4 percent commission at closing for brokers bringing in a buyer as opposed to the more usual 3 percent. THOSE PRICEY CONSULATES ARE BEATING CITY HALL The mansions used as ambassadorial residences or consulates include the third most expensive town house in city property records, notes the New York Times. The Federal Revival town house at 690 Park Avenue, declared a landmark, is listed in property records as a single-family home worth $37 million. It would have an annual tax bill of $213,000 if it had not been owned by the government of Italy since 1959. In fact, six of the 20 town houses with the highest listed market value in New York City are owned by foreign governments, including Italy, Iraq, Indonesia and Korea. Cameroon, a country in West Central Africa, with a population of about 18 million, owns a town house on East 73rd Street, valued at $18.5 million and used by its permanent representative to the United Nations. A study by the Department of Finance a few years ago reported that the city forgoes $4.5 million in taxes a year for the tax-exempt use of 208 one- to three-family homes in Manhattan. WHICH IS THE DEAREST BOROUGH OF ALL If you were to compare
residential sales, office leases and other real estate data in
each of the five boroughs, wouldn't you expect Manhattan to dominate
every category? It was actually Queens that saw BUT YOU CAN ALWAYS FIND ONE WHEN YOU NEED ONE The number of new real estate salespeople entering the profession for the first time in recent memory stalled last year, according to the Real Deal. For the five boroughs, the number of salespeople, who enter at the lower ranks of the profession and are less experienced than licensed brokers, was flat for 2007. Meanwhile, the number of brokers was up 4.8 percent for the year, likely a sign existing salespeople are taking the higher level of licensing as the market grows more competitive. New York Department of State statistics show that the number of salespeople in New York City in 2007 was 42,248, down 0.1 percent from 42,293 in 2006. That's a departure from the profession's past popularity. Of the five boroughs, Manhattan showed the largest uptick, at 0.6 percent, while Staten Island saw a steep 6.4 percent drop-off. Staten Island also saw the smallest growth in its broker ranks, while Manhattan and Brooklyn saw the strongest. While the total number of brokers in all of New York City in 2007 was 25,529, up 4.8 percent from 2006, Manhattan broker ranks increased 6 percent for 2007 and Brooklyn increased 6.2 percent. Staten Island increased its broker ranks by a mere 1.8 percent, to 1,166 brokers. In order to become brokers, licensed salespeople must accumulate points through sales and rentals, a process that takes about two years and ensures that those who are going for broker's licenses are already experienced agents. THIS IS ONE OPEN HOUSE YOU'LL HAVE TO PAY TO ATTEND
WHERE WILL IT EVER END An investor group has listed a 36-foot-wide townhouse for $64 million, one of the highest asking prices in the city, says the Wall Street Journal. On East 68th Street near Fifth Avenue, the 18,500-square-foot mansion was built in 1905 by Henry T. Sloane, an heir to a luxury-furnishings emporium. He had it designed by architect C.P.H. Gilbert, responsible for many of New York's turn-of-the-century large-scale townhouses, including the current home of the Jewish Museum. The Sloane house has ceilings of more than 17 feet, multiple terraces and original wood paneling. In 1941, it sold for $180,000 to an art dealer. In 2003, a developer paid $7.6 million for the house, which had been a rental building with nine apartments. In 2007, the investor group paid $39 million for the property, including the cost of relocating its remaining tenants. OL' BLUE EYES SLEPT HERE As did Cole Porter. And now you can, too, for $140,000 a month. That's the most expensive monthly rent in the city, says the Real Deal. The high-class location is the Waldorf Towers, where Brad Pitt and Angelina Jolie reportedly shelled out nearly $100,000 a month to rent a different unit, according to the New York Post. The 6,000-square-foot apartment was once home to Frank Sinatra as well as composer/songwriter Cole Porter, for whom it is named. The previous long-term tenant, who resided there for 10 years until February 2007, configured the unit as a six-bedroom, with a 24-foot-long marble entry gallery, 720-square-foot living room, library, formal dining room, kitchen and a "garden room" for entertaining. Each bedroom has a private bathroom. The master bedroom, on Park Avenue, has views of Central Park and St. Patrick's Cathedral. IT HAS NOT PROVED TO BE ONE OF THEIR GREATEST HITS After nearly two years and $3 million in price cuts, Ozzy and Sharon Osbourne have given up trying to sell their Malibu beach house, according to Mrs. Osbourne's publicist, says the Wall Street Journal. Now, they're trying to rent it. The home, most recently listed for $11 million (down from an original $14 million in 2006) is available for long-term lease at $37,500 a month or for short-term lease in the summer at $85,000 monthly. There are fireplaces, terraces on all three levels, a walled-in garden and 39 feet on La Costa Beach. But, it seems, no hidden cameras, which perhaps belonged in the L.A. house of their reality-TV series that they sold to Christina Aguilera for $11.5 million after two years on the market. HOLLYWOOD CELEBS PLAY THE HOUSING MARKET REALITY SHOW The housing-market crunch isn't just hitting small-time buyers on Main Street - Hollywood stars are also feeling the pain, observes the New York Post. Pop rocker Avril Lavigne has had to drop the price of her home near Mulholland Drive from $6.9 million to $5.8 million, Forbes magazine reported on its Web site, according to the Post yesterday. Lavigne is taking a bath on the price, even though the house has five bedrooms, six bathrooms, a tennis court and a pool. TV star and former Lindsay Lohan flame Wilmer Valderrama is also among the losers. He sold his home in the San Fernando Valley for $1.75 million, $200,000 less than he paid for it. Ed McMahon was forced to put his 7,000-square-foot Beverly Hills home on the market for $5.7 million - after shelling out $7.7 million for it two years ago. And the Wall Street Journal says hip-hop star Kanye West has agreed to sell his Beverly Hills, Calif., property for about $8 million less than a year after he bought it for $7.15 million. In the Beverly Hills flats, the 0.8-acre property came with a house, but the listing calls it a "teardown. The sale includes a design for a contemporary home by a "world-renowned architect," the listing says. The six-time Grammy award-winning rapper and producer originally listed the property in the fall for $8.7 million. West, 30, who paid $1.25 million for a small apartment in Manhattan's SoHo, couldn't be reached for comment. A LATE ART COLLECTOR'S ONETIME ESTATE FINDS A BUYER The former Greenwich, Conn. home of Joseph Hirshhorn has sold for $30 million, the Wall Street Journal reports. One of the largest recent sales in the suburbs of New York City, the deal was 21 percent below the original asking price. The 22-acre estate was the original site of the self-made mining mogul's sprawling sculpture garden, which included works by Auguste Rodin, Constantin Brancusi and Henry Moore. In the 1960s, with institutions from Israel to New York seeking his 6,000-work collection, the Latvian-born financier donated it to the U.S., to establish the Smithsonian Hirshhorn Museum and Sculpture Garden on the National Mall. He died in 1981. The hilltop English Norman-style manor house, built in 1939, has views of Long Island Sound and the New York City skyline. There are indoor and outdoor pools, two greenhouses, two master suites, a tennis court and a billiard room. The seller had restored the house and land extensively, a person familiar with the transaction said. Names of the buyer and seller couldn't be learned. ALTHOUGH ALL WET, A PENTHOUSE REGRET DOES A BUYER GET A buyer has finally surfaced for Bob Guccione's former funhouse, reports to the New York Post. The double-wide, 22,000-square-foot Upper East Side mansion with 27 rooms and an indoor pool at 14-16 E. 67th St. - which has been on and off the market for the past six years with a last asking price of $59 million - has an accepted offer. The buyers, according to sources, are hedge-fund manager Philip Falcone and his wife Lisa, who've just completed restoration of a townhouse they own a few doors away. The Post quoted a source as saying the final price was below $50 million, preserving the current record of $53 million for a 25,000-square-foot townhouse on East 75th Street purchased by investment banker J. Christopher Flowers nearly two years ago. Those who have toured his property say it's in need of repair. "It's falling apart, and the roof leaks like a sieve," says a recent visitor. LET'S SEE, KITCHENS OF CHERRY, STAINLESS AND. . . GLASS In the estimation of Realty Times, marble and granite are out and recycled glass is in. Recycled glass surfaces look good, are unique, and come in many different colors and styles. They also last just as long as marble and granite, the Web site says. Vetrazzo, a Richmond, Calif. company making glass surfaces since 1996, has had its counter tops showcased in the Ritz Carlton hotel in Miami's South Beach and on the nationally televised program "Living with Ed." Vetrazzo uses discarded glass from sources such as decommissioned traffic lights, windshields, used bottles and plate glass windows to create surfaces of 85 percent glass, 100 percent of which is recycled. The surfaces come in a wide range of colors, determined by the components. For instance, "Cubist Clear" is composed of clear glass from recycled windows, and "Bistro Green" comes from recycled soda bottles, olive oil containers, pickle jars, and wine and water bottles. Vetrazzo maintains that the product is comparable to granite and marble in scratch, heat and stain resistance, but it is somewhat more expensive. ARE YOU READY FOR THIS HOT OLD TREND Linoleum is enjoying a revival, observes AARP magazine. Where else? It's made of linseed oil, jute, wood, cork and rosin, while vinyl flooring, by contrast, is composed of polyvinyl chloride, a petroleum product that releases cancer-causing dioxins during production. Although linoleum's costs are comparable to vinyl's, its life span of 30-40 years way outdistances vinyl's 10-20 years. Because linseed oil has anti-bacterial properties, hospitals favor linoleum, which is also antistatic, repelling dust and making life easier for allergy sufferers. BIG BROTHER NOW HAS A BIG SISTER Logging onto a personalized Web site, you now can find out when something goes wrong at home, monitor when things are going right, even find out when a housekeeper comes and goes, says the Wall Street Journal. InGrid, iControl Networks, NextAlarm.com, Broadband Alarm and Alarm.com represent a wave of Internet- or cellular-based home security and monitoring products on the market now. Larger companies, such as AT&T Inc., are also moving into the wireless home-security market. Just 1.5 percent of homes in the U.S. now use wireless monitoring systems, but that percentage is expected to reach 5-6 percent by 2012, according to market researcher Parks Associates. That's far below the estimated 25 percent of U.S. households today that use traditional security systems, such as ADT Security Services and Brink's. Internet-based security, however, allows homeowners to place wireless sensors throughout the home - beyond just entryways. Many of these systems have central monitoring provided by a third party. Using a password-protected Web page, homeowners can use their computers to view the status of each sensor, see a history of dates and times sensors were triggered, and tailor settings to send email, text-message updates and alerts to smart phones or other hand-held devices. Sensors can be installed on everything from liquor chests to medicine cabinets; gun racks to garage doors. Some of the systems also come with stand-alone Web cams that can be monitored through the Web site while users are at work or out of town. IF CONTRACTORS HAVE A HAMMER, SO DO YOU If you can successfully run your contractor's credentials through the state regulatory agency, consumer advocacy groups such as ContractorCheck.com and a trade group, chances are you'll know if you've got a winner or loser, counsels Realty Times. Experian, known more for credit reporting services, offers the ContractorCheck.com service. It allows consumers to search for contractors in their area, check a specific contractor's business background, his or her bonded status, the status of his business license and insurance, how long the company has been in business, and whether the contractor has any judgments or liens against him. Other operations, including Angie's List and the National Association of the Remodeling Industry all offer similar services that take some of the guesswork out of checking contractors' professional standing. There are plenty more. FORGET THE FRILLS IN THIS MARKET PICTURE THIS, SOPHIA PETRILLO The New York Times has identified a new trend: hiring a well-known photographer to immortalize your home. To some, the newspaper says, that's even better than a magazine photo spread, because the results can be displayed in entry halls and over fireplaces, just like any piece of art, or bound in a book. "We fetishize homes now, in a way that we never used to," said Todd Eberle, a photographer whose work appears in Vanity Fair and in prominent museums. He has been hired by many celebrities, including Martha Stewart and Bill Clinton, to document their homes and offices. His clients, he said, want him both to memorialize their homes as they really are, and at the same time to "take it to a different level, and somehow improve upon the reality." Elliott Kaufman, a well-known architectural photographer, recently started a company called Legacy Editions because he noticed the growing interest in photographing homes. He not only takes the pictures, but interviews clients about how they live, including their favorite time of day in the house and what space they particularly like. Then he puts it all together in a hand-bound coffee-table book. Some clients, he said, have books made for each house they own. His fee starts at $3,500 for a day of shooting, comparable to his magazine day rate, and $3,500 more for the bound book, and it climbs from there, depending on the time spent and the number of locations. FEWER BORROWERS ARE TAKING REFI CASH Freddie Mac reports that that the fourth quarter saw $37.8 billion cashed out, down from a revised $58.3 billion cashed out in the third quarter of 2007 and more than 50 percent lower than the amount cashed out in the same quarter a year earlier. Commented Amy Crews Cutts, Freddie Mac deputy chief economist: "This is real evidence of the upset in the mortgage credit markets as well as the impact of the decline in home values that occurred late in the year." In addition, Freddie Mac says that properties refinanced during the fourth quarter of 2007 experienced a median house-price appreciation of 21 percent during the time since the original loan was made, down from a revised 25 percent in the third quarter 2007. For loans refinanced in the fourth quarter of 2007, the median age of the original loan was 3.8 years, one month older than the median age of loans refinanced during the second quarter of 2007. "Home-value declines coupled with tougher underwriting standards at many lenders contributed to a decline in the amount of home equity cashed-out as part of a conventional loan refinance during the fourth quarter," noted Frank Nothaft, Freddie Mac vice president and chief economist. "At the same time, rates on jumbo mortgages for prime borrowers became relatively much more expensive compared to conforming rates, averaging 7.1 percent for 30-year fixed-rate loans in December, about a full percentage point above rates on a comparable conforming product. These higher rates on jumbo loans put a damper on refinance activity and reduced the overall volume of originations." TROUBLES ASIDE, LENDERS STILL WANT YOUR BUSINESS Mortgage companies spent nearly $409 million on ads in the third quarter of last year, the most recent period for which data are available, more than the industry's ad spending during the peak of the housing boom, according to TNS Media Intelligence, says the Herald Tribune. "There may be some good, legitimate offers," said Frank Dorman, a spokesman for the Federal Trade Commission, which monitors advertising for deception. "But it's a good time for consumers to be especially wary." SUBPRIME BORROWING ISN'T THE ONLY PROBLEM As home prices fall and banks tighten lending standards, people with good, or prime, credit histories are falling behind on their payments for home loans, auto loans and credit cards at a quickening pace, according to industry data and economists, reports the New York Times. "This collapse in housing value is sucking in all borrowers," said Mark Zandi, chief economist at Moody's Economy.com. Like subprime mortgages, many prime loans made in recent years allowed borrowers to pay less initially and face higher adjustable payments a few years later. As long as home prices were rising, these borrowers could refinance their loans or sell their properties to pay off their mortgages. But now, with prices falling and lenders clamping down, homeowners with solid credit are starting to come under the same financial stress as those with subprime credit. "Subprime was a symptom of the problem," said James F. Keegan, a bond portfolio manager at American Century Investments, a mutual fund company. "The problem was we had a debt or credit bubble." At the end of September, nearly 4 percent of prime mortgages were past due or in foreclosure, according to the Mortgage Bankers Association. That was the highest rate since the group started tracking prime and subprime mortgages separately in 1998. The delinquency and foreclosure rate for all mortgages, 7.3 percent, is higher than at any time since the group started tracking that data in 1979, largely as a result of the surge in subprime lending during the last few years. And it is not just first-mortgage default rates that are rising; about 5.7 percent of home equity lines of credit were delinquent or in default at the end of last year, up from 4.5 percent a year earlier, according to Moody's Economy.com and Equifax, the credit bureau. GEE, U.S. FORECLOSURE FILINGS SOARED LAST YEAR They rose 79.2 percent in 2007 compared with 2006, with 1 percent of all households entering a stage of foreclosure, data company RealtyTrac reports. The company's year-end report showed that Detroit, Stockton, Calif. and Las Vegas documented the three highest foreclosure rates among the nation's 100 largest metro areas last year. Said James J. Saccacio, chief executive officer of RealtyTrac: "Most of the metro areas with the highest foreclosure rates were either cities like Stockton and Las Vegas, which experienced meteoric growth and unsustainable price appreciation over the past few years, or cities like Detroit, which are undergoing a more widespread economic downturn along with higher unemployment rates." Detroit's dubious achievement was having close to 5 percent of its households entering some stage of foreclosure during the year, 4.8 times the national average and up from about 3 percent in 2006. MORTGAGE INSURERS ARE MAKING IT TOUGHER TO BORROW Mounting losses and the threat of credit-rating downgrades are hitting the mortgage insurance industry and adding to strains on the housing market, according to the Wall Street Journal. Rising claims on policies mortgage insurers sold during the housing market boom are hitting hard. MGIC, the largest mortgage insurer in the country by market share, said it posted a $1.47 billion loss in the fourth quarter. A much-smaller rival, Triad Guaranty, reported a $75 million quarterly loss. Investors have punished the stocks the past year, but the mortgage insurers are not in danger of going bust and their travails aren't causing widespread problems in the financial system. They are getting help, in the form of higher rates, tighter underwriting standards and a recent move by Freddie Mac that should allow them to rebuild capital. The problems are forcing mortgage insurers to adopt stricter underwriting standards. MGIC, for instance, won't insure borrowers who won't put down at least 5 percent in Arizona, Florida, California and Nevada and major metropolitan areas in many other states. The result is that some people who have trouble scraping together a down payment could find it harder to purchase a house. The tightening is "another thorn in the consumers' side," says Ivy Zelman, chief executive of Zelman & Associates, a housing research firm. DESPITE, OR BECAUSE OF, FEDERAL ACTION, BORROWING DIPS For the week ending Feb. 15, mortgage loan application volume fell 22.6 percent on a seasonally adjusted basis below the previous week, according to the Mortgage Bankers Association. On an unadjusted basis, the decrease was 21.2 percent; compared with the same week one year earlier; however, activity was up 33.9 percent versus the prior year. Refinancing went down 27.9 from the previous week, and purchase applications dropped 11.5 percent seasonally adjusted. On an unadjusted basis, the purchase decrease was 7.4 percent. The refinance share of mortgage activity slipped to 61.7 percent of total applications from 67.4 percent the previous week, and the adjustable-rate mortgage share grew to 12.8 percent from 9.9 percent. RATES BOUNCE UP The 30-year fixed-rate mortgage (FRM) averaged 6.04 percent for the week, up from last week's 5.72 percent but down from 6.22 percent last year at this time, according to Freddie Mac. The 15-year FRM this week was 5.64 percent in comparison with 5.25 percent the week before and 5.97 percent the prior year. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.37 percent, up from last week's 5.19 percent and below 5.96 percent a year ago. One-year Treasury-indexed ARMs averaged 4.98 percent, down from 5.00 percent. At this time last year, it was 5.49 percent. Commented Frank Nothaft, Freddie Mac vice president and chief economist: "As the spread between long-term fixed-rates and adjustable-rates widens, it's possible we could see a slight increase in the popularity of adjustable-rate mortgages." GAP BETWEEN MORTGAGE AND HOME VALUES NEARS RECORD Not since the Depression has a larger share of Americans owed more on their homes than they are worth, according to the New York Times. With the collapse of the housing boom, nearly 8.8 million homeowners, or 10.3 percent of the total, are underwater. That is more than double the percentage just a year ago, according to a new estimate of the damage by Moody's Economy.com. IF YOU WANT TO RENT AT THE BEACH, BETTER HURRY Landlords and property managers say choice beach and lakefront rentals are going fast, with reservations for peak summer weeks up 10 percent or more over last year, notes the Wall Street Journal. Demand is healthiest in expensive resorts like Aspen, Colo., and Malibu, Calif. In Amagansett, on Long Island's East End, rentals are reportedly 50 percent filled already. But outside the luxury sector, shadows loom. In many popular coastal areas, the inventory of off-water, midpriced rentals has swelled despite brisk demand. Newly constructed vacation homes are on the market and putting pressure on rates. A glut is likely to grow, as more owners who would have flipped homes rely on them longer for rental duty while waiting out the sluggish residential-sales market. Older, smaller properties are being pinched first, as people increasingly vacation with extended families and look for newly built large homes with central air conditioning, hot tubs and other amenities. A MAGAZINE VIEWS REGIONAL DIFFERENCES IN ARCHITECTURE What's generating
buzz in Chicago might not resonate in L.A., notes Business Week.
And the issues driving design in Miami might not mean much in
New York. "Although big-name, international TITLE COMPANIES GO UNDER THE MICROSCOPE The collapse of the housing boom is bringing harsh new scrutiny to the $17 billion title-insurance business, including allegations that insurers colluded illegally and paid kickbacks to agents or brokers to get business, says the Wall Street Journal. In the latest legal challenge, an antitrust suit filed Feb. 1 in federal court in Brooklyn accuses the four firms that dominate title insurance nationwide of illegally fixing prices in New York State. Although insurance firms have limited immunity from antitrust claims because state regulators approve their rates, the suit accuses title firms of concealing improper costs underlying their rate requests. At least six states, including California, Colorado, Florida and New York, have targeted alleged kickbacks and payments by title insurers to agents and others. Since 2003, title insurers, their agents or affiliates have paid more than $100 million in fines, penalties and settlement money in cases brought by state and federal regulators, according to a 2007 report by the Government Accountability Office. The report also cited a lack of competition in most states. The New York antitrust suit names four big firms that control nearly 90 percent of the market: Fidelity National; First American; LandAmerica Financial; and Stewart Title. The suit says rates in New York are among the highest in the nation and that New Yorkers paid $1.2 billion for title insurance in 2006, more than four times the $260 million paid in 1996. Title-insurance rates in New York are set by an industry group, which submits them to state regulators for review. The suit alleges that these rates overcharge consumers because they conceal from regulators referrals and other payments that make up much of the cost of a title policy. "They're gaming the regulatory system," said Gordon Schnell, a lawyer representing the four named plaintiffs. FROM THE FRYING PAN OF FORECLOSURE, SOME PICK FIRE Recession fears along with nationwide housing foreclosures have pushed some homeowners to take drastic and illegal measures, says ABC News. Looking to cash in on their insurance rather than face foreclosure, some people have committed arson to avoid losing their homes. How many? There are no statistics to indicate that more cash-strapped homeowners are burning their homes for insurance money than before. Michigan authorities believe 38-year-old Sheryl Christman was one of those people, when she set her home ablaze Sept. 1. Christman was just three days short of foreclosure. "I don't know if she thought she was going to get the insurance money or what," said Tonya Miller, of Nova Star Mortgage Co. "But she won't. It will go to the mortgage company." You've been warned. Well, not you, of course. FOR SOME, THERE IS A SILVER LINING As the mortgage-lending crisis spreads, business is booming among small mortgage field-servicing firms that specialize, among other things, in "property preservation," says the Wall Street Journal. Across the country, a web of handymen, contractors and inspectors are on the front lines of a battle to keep the vacated homes free from burst pipes, vandals, rot and animals until they can be resold - and to preserve the integrity and living conditions of neighborhoods. Some trade groups estimate mortgage servicing to be a $1 billion business with 8,000-10,000 active companies in operation. Work often begins when a homeowner is 45 days delinquent on mortgage payment and the lender requests an occupancy inspection. A simple drive-by can yield clues: no toys in the yard, no car in the driveway, an overgrown lawn, no lights on at night. If the owner continues not to pay, field-service reps might be asked to contact homeowners and try to resolve the default situation - known as loss mitigation. Finally, if a home moves into foreclosure, field-service vendors do everything from helping pack up homes for evicted tenants to removing family pets, dead and alive, left behind when owners vacate. Then the nitty-gritty preservation work to maintain the vacant property begins. BY COMPARISON, RENTING IN THE U.S. IS A BARGAIN The dollar's recent plunge has made pricey foreign markets particularly daunting for American expatriates, businesses and anyone unlucky enough to receive a salary in greenbacks, observes Forbes. That's what's happening in Hong Kong. There, in dollar-adjusted terms, a two-bedroom, unfurnished apartment runs $6,398 a month. By comparison, $4,000 a month for Moscow and $4,102 for Tokyo look cheap. The magazine looked at median rents in high-end, unfurnished apartments in building in a good part of town. Combining subtle rate increases with the dollar's decline in London, you're left with a 30 percent jump in rent, or $900, from 2006 to 2007. Moscow rents have jumped by 33 percent, or $1,000, when adjusted for the dollar. And in a market that's still relatively cheap, such as Bangalore, India, rents have increased 87 percent from last year. HEATING BILLS ARE GETTING SHORT SHRIFT As families struggle with a combination of high heating costs and a shaky economy, utilities say more customer accounts are falling delinquent, according to the Wall Street Journal. In New York, Consolidated Edison said it has experienced a 12 percent increase in delinquencies, with 140,000 households falling behind during the past three months. "We think part of it has to do with subprime mortgages," said ConEd spokesman Michael Clendenin. He added that people with rising mortgage costs sometimes put off paying utility bills because they know that under the laws of New York and many Eastern and Midwestern states, their power can't be shut off for nonpayment during winter months. Overall, the American Gas Association said a poll of its gas-utility members showed an increase in the number of accounts past due, though it furnished no statistics. Particularly hard hit are the 12 percent of U.S. households with homes heated with propane or heating oil. Many of those customers are spending twice as much to stay warm this winter as those who heat with natural gas or electricity. And since they're served by small companies and not regulated utilities, these homeowners don't have cut-off protections in the winter months. "We're back at the point of crisis again this winter," said Mark Wolfe, executive director of the National Energy Assistance Directors' Association, an organization of state energy program managers. HOMEBUILDING STOCKS MAKE BELIEVERS OF SOME INVESTORS Shares of the S&P Homebuilders Sector Spider, the exchange-traded fund that tracks the biggest publicly traded companies in the residential construction business, have risen 7 percent this year, notes Fortune. That gain is noteworthy on its own, given the 7 percent decline in the S&P 500. But what's even more dramatic is the huge rally that erupted in these stocks in the middle of last month, right before the Federal Reserve started cutting interest rates in a bid to stave off a possible recession. The homebuilders ETF is up 29 percent off its early January lows, while components Toll Brothers, Lennar and Hovnanian are up 40 percent, 52 percent and 96 percent. So after two and a half years of steep drops, have the homebuilding stocks finally seen a bottom? Some investors believe they may have, but the early returns on the 2008 winter sales season haven't been encouraging. The apparent disconnect between stock prices and what's going on in the industry has some observers questioning the bottom call. The skeptics attribute the bounce to factors like short-covering - the process in which investors who had been betting against a stock buy the shares to cover, or close out the trade. Others say the homebuilders have rallied before and may do so again, but they won't put in a sustained upswing till their businesses improve. Analyst Gary Gordon at Portales Partners in New York notes that over the past year, the homebuilders and related stocks have repeatedly rallied, only to give up those gains and touch new lows afterward. But other market watchers say the bounce in these stocks is already predicting a turn in the homebuilding business. Three's Flexibility In the late 1920's, when the American economy was still strong, a flashy developer who was the Donald Trump of his day began acquiring land in Chelsea on which to build the largest apartment building that New York, and the world, had ever seen. According to the building's Web site, from which this screed is appropriated, Mandel owned the city block bounded by Ninth and Tenth avenues and 23rd and 24th streets by 1929. The land was once owned by Clement Clark Moore, who wrote 'Twas the Night before Christmas, and was situated across from fashionable "Millionaire's Row." Mandel hired the architectural firm of Farrar & Watmaugh to design the massive complex, called London Terrace, which was built in two phases. The central structure comprising 10 adjoining buildings was completed in 1930. Later, the four corner structures, now called London Terrace Towers, were added. The especially handsome complex evocative of London contained 1,665 apartments, the majority of them one-bedrooms, composed of 4,000 residential rooms. For many buyers, especially first-timers, one-bedroom apartments represent the most flexibility. A single resident can live in one without feeling unduly extravagant; a couple can fit rather comfortably in such an apartment; and parents can even squeeze in a baby if necessary. The one-bedroom - three-room (including kitchen, living room and bedroom) - apartment can be a great combination of flexibility and economy. That is why a third of the co-ops sold in the last quarter were one-bedroom apartments (slightly behind studios and slightly ahead of two-bedroom units). Even developers of new condos allocated nearly a third of the units to one-bedroom apartments, though 50 percent more two-bedroom apartments were sold during that period of rampant consumption. Mandel's dream was grand indeed. He filled London Terrace with state-of-the-art amenities that included: a 75' x 35' pool with gorgeous mosaic tiles all around and views of the acre of gardens inside the block, a building-wide intercom system, on site shopping, a free pageboy service, a telephone message service, a penthouse community room, a rooftop play area for children, another roof deck furnished like the deck of a grand ocean liner and doormen dressed as English Bobbies. The pool, roof deck and gardens are still in use today. Acclaimed and ambitious, the dream eventually killed its creator. The Great Depression struck just as Mandel started to build, forcing the developer into foreclosure in 1934. Mandel jumped to his death from atop his dream building, leaving the elegant London Terrace a financial mess that took almost fifteen years and four banks to clear up. Little mention of his fate is made today, though residents bent on suicide seem to follow his path at a disconcerting rate. In 1948, the building was divided into two parts and sold to separate management companies. The ten middle buildings were sold to four partners, who included two electrical contractor brothers and two partners in the concrete business. The corner towers went co-op in 1987 and the center buildings, known as London Terrace Gardens, remain as rental units. In addition to the heated pool, half the size of an Olympic pool, amenities now include a gym with steam rooms, saunas and an annual fee of around $374; bike rooms; attended garage; extra storage; high speed Internet access; laundry rooms; and 24-hour doormen. Moreover, maintenance covers gas and electricity as well as, of course, heat and hot water. And how many co-ops have a committee on historic preservation? It is hardly surprising, given the number of units, that various brokers have listed several of them for sale in the complex. Below, are many of those one-bedroom apartments, one-bedroom units on the Upper East Side's Carnegie Hill, and a variety of listings on the Upper West Side - all seen since the last issue. Chelsea's London Terrace Towers
Carnegie
Hill One-Bedrooms
Upper West Side
Some of Manhattan's Latest Listings Please click here to view available properties. (To view all photos, tours, floor plans and maps, please use Internet Explorer.) Click Here to Sign Up For Your Free Issue of Realty Digest!
©
2007 Service You Can Trust |
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The
Real Estate Board of New York reports that the average reached
$732,000 during 2007, 15 percent higher than in 2006. The average
sales price of an apartment in Brooklyn rose 14 percent in 2007
to $494,000, the highest percentage increase out of all the boroughs.
Manhattan had the highest average condominium sales price in 2007
- $1,434,000, 17 percent more than in 2006. 
the
most single-family home sales last year and the smallest drop-off
in new condo building since the credit crunch hit, and it was
Brooklyn that had the greatest number of mixed-use building sales,
thanks to the size and housing makeup of those two boroughs and
current market conditions. That's the news from the Real Deal,
which set out to compare the boroughs to one another in the post-credit
crunch market and to examine some more long-term fundamentals
that are slowly changing as much of the outer boroughs gentrify.
When it comes to market growth and overall dollars and cents,
of course Manhattan historically rules the roost, with yawning
gaps in prices when stacked up next to the other four boroughs.
And Manhattan is also holding up better than the other boroughs
in the current market. Several reports show that Manhattan saw
an 11 percent gain in average residential prices in 2007, while
Brooklyn had an 8 percent gain, Queens experienced a 2.7 percent
drop, and the Bronx and Staten Island saw a flattening in prices.
"Open
house." The words are celestial music to the ears of certain
real-estate-obsessed New Yorkers, observes a theater critic of
the New York Times. What better way to spend a sleepy Sunday afternoon
than by poking around condos and co-ops for sale, clucking with
satisfaction at the lack of closet space or envying the eat-in
kitchen? Charles Isherwood asks. This beloved urban pastime can
now be enjoyed, after a fashion, in concert with a cultural experience.
The Foundry Theater's latest production, a play by Aaron Landsman
plainly titled "Open House," will be performed in two
dozen living rooms over the next month, in neighborhoods spanning
all five boroughs. 
As
the housing downturn enters its 30th month, glamour is giving
way to pragmatism and innovation - though not always to bargain-basement
prices - at the annual International Builders Show in Orlando,
Fla., notes the Wall Street Journal. Glossy granite countertops,
six-burner trophy stoves and giant hot tubs got less notice among
the 1,900 exhibitors than did detergent-dispensing washing machines,
leak-resistant faucets and unpickable locks. One of the showiest
new products is Lennox's X-Fires, a vent-free gas fireplace that
can be mounted to an interior or an exterior wall. It features
a catalytic converter that superheats the air to 600 degrees centigrade,
burning off most emissions including all carbon monoxide. 
architects
are working all over the United States - Renzo Piano, for example,
has current or recently completed projects in New York, Chicago,
L.A., San Francisco, and Atlanta - smaller, domestic firms are
playing important roles, too," the magazine says, adding
that the mix of big and small, global and regional is shaping
the American architectural landscape. "I don't see the regional
differences in design that were apparent in the past," responds
Paul Goldberger when asked what American architecture looks like
from his perspective at The New Yorker. "Trends today are
national or even global. Sustainability is certainly one. We should
be doing more on this, but we're doing more than we did in the
past." Modernist architects have even penetrated that bastion
of middle-brow design: the New York City apartment house. "Glass
has become the new white brick," says Goldberger. 
